The tax authority shows its hand: Chile's new valuation framework and what taxpayers will have to prove

In October Chile's tax authority publishes the methodology it uses to arrive at market values in audits. It says the document breaks no new ground, that it simply writes down criteria already in use. Which raises the question it does not answer: if they were already in use, from when are they enforceable?

On July 20, 2026 Chile’s tax authority, the Servicio de Impuestos Internos (SII), confirmed that it is drafting a resolution to open up the methodologies it uses to arrive at normal market values in cooperative compliance and audit work. Around fifty specialists from academia and the tax and legal professions attended the second working session on July 10. The consultation runs until October, when the final text is due.

Most of the coverage took the official line of transparency and tax certainty at face value. Nobody asked what happens to the burden of proof, which is where this is decided. Publishing a valuation methodology does not end the argument; it moves the argument onto different ground, and it raises what the taxpayer has to show.

For a business that has restructured in the last few years, or that prices anything between related parties, the practical question is what needs to be on file before October. Answering it means reading the resolution alongside two developments that came first: Article 64 of the Tax Code (Código Tributario), rewritten from scratch by Law No. 21,713 (Ley N° 21.713), and the power to audit a corporate group in a single proceeding.

What the resolution will be, and what it will not

The SII went to unusual lengths to say what the document is not. It will not break new ground on valuation. Nor is it a translation of an international standard, a catalogue of every methodology, or an academic treatment of valuation theory. What it will be is a common methodological framework for the valuations the SII carries out, built for technical consistency, transparency and predictability, drawing on its own experience with businesses, tangible and intangible assets and related-party dealings.

The reach came out at the working session itself. According to Diario Financiero, the framework will cover transfer pricing, gift and inheritance tax, asset disposals and corporate reorganizations. Those four headings account for most of the exposure sitting inside a family office or a mid-market group.

The technical sources the SII has named tell you a good deal about what is coming: International Valuation Standards Council (IVSC) standards, American Society of Appraisers (ASA) material, Aswath Damodaran on company valuation, and the Intellectual Property Toolkit produced by the JITSIC IP Forum. That last one is worth pausing on. JITSIC is the intelligence-sharing network that operates under the OECD’s Forum on Tax Administration, and its appearance on the list signals where the attention will fall: intangibles and cross-border structures.

The first session was held in late May, with universities, valuation specialists, the Bar Association, the Chilean Institute of Accountants (Colegio de Contadores) and the Big Four. No draft has been circulated publicly, and the consultation window closes in October.

Once the tax authority publishes its method, the question is no longer which method was right, but when the taxpayer applied the published one.

Article 64, rewritten from scratch

The resolution is not landing on open ground. It lands on a provision that changed twenty months ago.

Article 64 of the Tax Code, which gives the SII its power to substitute its own valuation for the taxpayer’s, was replaced outright by Law No. 21,713, published on October 24, 2024. The new text took effect on November 1, 2024, and the SII set out its reading of it in Circular No. 23 of March 27, 2025, which withdrew the long-standing Circular No. 45 of 2001. Five changes carry weight.

First, the power now cuts both ways. The old wording bit only where a price fell manifestly below the going market rate. The new one bites wherever the price differs manifestly from normal market values, and the circular spells out that this catches prices set manifestly high as readily as prices set low. An inflated value is now as exposed as an understated one.

Second, the scope widened. What once reached disposals of goods and supplies of services now reaches any act, agreement or transaction whose price feeds into the calculation of a tax. The circular instructs that those terms be read broadly.

Third, normal market value acquired a statutory definition. The second paragraph describes it as the value unrelated parties would have agreed in comparable transactions and circumstances, weighing the characteristics of the industry, sector or segment, the functions, assets and risks each side takes on, and the specific features of the assets or contracts at issue. This writes the arm’s length principle into Chilean domestic law, well beyond Article 41 E of the Income Tax Law (Ley sobre Impuesto a la Renta), which confined it to cross-border related-party dealings. Relatedness is tested under Article 8 No. 17, which reaches considerably further than share ownership.

Fourth, a formal notice must come first, except on real estate. The third paragraph requires the SII to serve a notice under Article 63, the citación, calling on the taxpayer to show that the transaction was priced at normal market values. The taxpayer has one month to answer, extendable once by up to a further month. The sixth paragraph carves out an exception: where real property is involved, no citación is required and the SII can issue the assessment immediately, alongside the valuation order. Anyone dealing in real estate loses the preliminary round that everyone else gets.

Fifth, there is a way out before the SII moves. The eighth paragraph switches off the charge where three conditions are met together: the taxpayer identifies the valuation gap itself in an amended return, files that return before the SII opens an enquiry, and the correction increases its tax base. The difference is then taxed under the ordinary rules for the transaction. An enquiry, here, is the notice served under Article 59. It is a narrow door, little used, and it closes the day that notice arrives.

Where an adjustment sticks, the cost is steep. Under the seventh paragraph, the gap between the taxpayer’s price and the SII’s attracts the standalone 40% charge (impuesto único) in the first paragraph of Article 21 of the Income Tax Law, regardless of the taxpayer’s legal form and regardless of which tax would otherwise have applied to the transaction. The charge falls on that gap alone, and nothing else may be levied on it.

Two routes are open once an adjustment is issued: a voluntary administrative appeal under Article 123 bis, filed within thirty days, which pauses the clock for court proceedings and is treated as refused if no decision is served within ninety days; and an appeal to the Tax and Customs Court under Article 124, within a strict ninety-day deadline. The citación itself extends the limitation periods in Article 200 by three months, and asking for more time to reply extends them further still. Answering is not optional, but every extra month requested also lengthens the SII’s own runway, and that arithmetic belongs on the table before anyone asks.

The other jaw of the pincer: audits at group level

In the 2026 Tax Compliance Management Plan, published on January 29, 2026, the SII named its enforcement priorities on OECD advice: cross-border transactions, corporate groups and multinationals, and high-net-worth individuals.

The number that explains why this matters sits in the same document. Roughly 76% of flagged taxpayers put their position right without an audit, simply by amending their returns. When routine non-compliance corrects itself, audit capacity is freed up for the hard cases. Mid-market groups can no longer count on the SII being too stretched to look closely.

Columns published in the week of July 17 to 23 also carried the claim that Law No. 21,713 lets the SII audit every entity in a corporate group as a single exercise. The claim travelled without a statutory reference attached. It holds up, and here is what it rests on:

• Article 59 ter of the Tax Code, introduced by Law No. 21,713, empowers the SII to run a unified audit across a corporate group so that its findings hang together instead of arriving piecemeal. The detail is in Circular No. 6 of January 16, 2025.
• Article 8 No. 14 defines a corporate group by reference to the second paragraph of Article 96 of the Securities Market Law, Law No. 18,045 (Ley N° 18.045), and requires every group to appoint a representative. Fail to appoint one, the circular warns, and the SII cannot run its preventive and collaborative measures, which leaves the audit track as the remaining option.
• Article 8 No. 18 brought in the concept of tax sustainability, with an annual certificate issued by independent certifiers registered with the SII, cooperation agreements available to two or more companies in the same group, and a public transparency register.

The gateway conditions are narrow. The transactions must have taken place in Chile or carry Chilean tax consequences. Every group company that took part must be brought in, but only those. The proceeding opens with an order that fixes the responsible office, normally the one covering the parent’s domicile or the Large Taxpayers Directorate. Taxpayer confidentiality survives intact: each administrative act remains individual, is served only on the taxpayer it concerns, and cannot disclose income or losses of other group companies. And for anyone assuming this is a multinational problem, the circular says plainly that SMEs can form a corporate group and can therefore face a unified audit.

Put a published valuation method in the hands of a team looking at every company involved in a restructuring at the same time, and the risk changes shape. An inconsistency between two companies in the same group, invisible while each was examined on its own, becomes the thread the auditor pulls. It is the same jump in analytical scale we examined in Artificial intelligence enters the State’s data, now with a statute behind it.

What happens elsewhere when a tax authority publishes its method

Australia: transparency that raises the price of certainty. The Australian Taxation Office publishes Practical Compliance Guidelines sorting structures and pricing into risk zones, alongside a guide to market valuation for tax purposes. Its principles map closely onto what the Chilean document is likely to contain: the valuation must answer the specific tax provision in play, use inputs consistent in nature and source, consider more than one approach where that is feasible, apply impartial judgement to assumptions and, above all, assemble and record the evidence properly. The result was predictable enough. Sitting in the low-risk zone costs more in documentation, not less.

OECD: hard-to-value intangibles. Annex II to Chapter VI of the Transfer Pricing Guidelines allows tax administrations to treat what actually happened after the event as presumptive evidence about whether the original pricing was sound. The taxpayer’s answer is built into the same rules: rebut the presumption by showing that the information behind the pricing was reliable when the deal was struck. What is on trial is not the outcome but what a reasonable party could foresee on the day, and the only way to prove that is with paperwork carrying that date.

Spain: a cautionary tale. The cadastral reference value, introduced by Law 11/2021 and in force since January 1, 2022 as the tax base for transfer tax and for inheritance and gift tax, showed the same dynamic running the other way. The burden of proof flipped. Where the taxpayer used to declare a figure and the administration checked it, the administration now sets the figure and the taxpayer has to establish, by whatever evidence it can muster, why its case departs from it. The comparison is instructive precisely because the Chilean resolution insists it is a methodology and not a schedule of values. A published method leaves room to argue; a published number does not.

In none of the three cases did publishing a method make the argument go away. What changed was the subject of the argument, and the taxpayer who came out ahead was consistently the one who documented at the time.

From the report written for comfort to the report that survives

The new Article 64 leaves it to the taxpayer whether to file a valuation report at all, since value can be established by any admissible means. But once a report is filed, everything behind it has to stay available to the SII: the comparables, the parameters relied on and the methods applied. Six features separate a report that will survive an audit from one that will not.

1. Timing. A report commissioned after the citación arrives shows that the taxpayer took the audit seriously, and says nothing about whether the price was reasonable. Only a contemporaneous report does that.
2. A stated and defended method. Running a discounted cash flow, a multiples analysis or a replacement-cost calculation is not enough on its own. The report has to say why the other approaches were set aside.
3. Assumptions that can be traced. Discount rate, projections, risk premium, terminal value: each needs a source someone else can check. An assumption with no traceable source is the point at which the report fails.
4. Comparables with a functional analysis behind them. The statutory definition turns on industry, functions, assets and risk. A comparable that has not been tested against those proves nothing.
5. Who signed it, and on what basis. The resolution will rest on IVSC and ASA standards, so a report that ignores them ends up arguing against the auditor’s own reference material.
6. A documented commercial rationale. Circular No. 23 accepts a range of business purposes, provided the purpose amounts to something more than a tax saving. Its examples include better commercial terms, a competitive edge, access to financing, lower costs or risk, greater productive capacity or market presence, and simpler management. Proving the purpose falls to the taxpayer: expert studies or reports, comparisons against other players in the market or public records, and bank financing documents from either side of the transaction.

On reorganizations, one condition decides the outcome before any report is opened. The SII’s power falls away only where the tax basis of the assets being transferred, allocated or contributed is carried across unchanged. The circular accepts a transfer at the values shown in the accounts, but the receiving company must record the assets at the tax value they carried in the transferring entity. Without that entry, no commercial rationale will rescue the transaction. We handle this alongside our Corporate and Commercial Law practice, because the tax defence of a restructuring is won or lost in the corporate paperwork that put it into effect.

What the exposure looks like in practice. The same problem shows up in three guises. A family group restructured in 2025 through contributions at tax value, with a commercial rationale nobody ever wrote down; when the citación lands, the explanation is reconstructed after the fact and the auditor can tell. A company sold an intangible to a related party and commissioned the valuation report last month to support a transaction from early 2025. A third taxpayer priced a related-party transfer well above market, on the assumption that the SII only went after low prices, and finds that since November 2024 the power runs in both directions. In each case the adjustment can attract the 40% charge, and in each case what decided whether there was an argument to be had was a document that cost very little at the time and cannot be produced now.

The awkward question: when does something that breaks no new ground start to apply?

The SII says the resolution introduces nothing new, that it sets down technical criteria already in use across its audit work. The statement is meant to reassure, and it leaves open the question of when those criteria became enforceable.

If the criteria were already in use, the resolution creates no new standard. It makes an existing one visible. And an existing criterion is, in principle, capable of being applied to any year still open under the limitation periods in Article 200: three years, or six where no return was filed or the return was maliciously false. On that reading, an October document reaches back over transactions already completed. Two things cut against it.

The first is a hard limit on temporal scope. The new Article 64 has applied since November 1, 2024 and, on the SII’s own reading in Circular No. 23, covers transactions entered into from that date. Anything earlier remains governed by the old text, which reached only prices manifestly below the going market rate, and by Circular No. 45 of 2001. The two-way power, the statutory definition of normal market value and the wider scope covering any act or agreement cannot be pushed backwards through a methodological resolution. A review of anything predating November 2024 has to be fought on the law as it then stood, which sharply narrows the ground on which the October framework could operate retrospectively.

The second is Article 26 of the Tax Code, which works differently from the way it is usually described. It blocks retrospective collection where a taxpayer acted in good faith on an interpretation the SII had put forward in circulars, rulings, reports or other official documents, and the same protection applies where such a document sets down a new criterion. The protection therefore hangs on an official document existing beforehand. That is where the knot lies. If these valuation criteria were already being applied but never appeared in a published official document, there was no official interpretation for anyone to rely on. A taxpayer who valued differently gets nothing from Article 26, because there was nothing there to follow. By the same logic, the SII cannot treat as public a criterion that appears nowhere on the record. For transactions after November 2024, the argument runs on the text of Article 64 and on Circular No. 23, not on unpublished internal practice.

From October the resolution becomes an official document, and its protection runs forward for anyone who follows it. Looking back, its effect is evidential rather than legal: it gives an auditor a technical yardstick for reports already written. Which is why the months between now and October are best spent pulling the valuations on open years and working out whether they would survive the framework about to appear.

Eight things to settle before October

1. An inventory of valued transactions in open years. Reorganizations, capital contributions, transfers of partnership interests, intangibles, anything priced with a related party over the last three to six years, split between those before and after November 1, 2024, because different law applies to each.
2. A stress test against the sources the SII has named. Running historical valuations against IVSC, ASA, Damodaran and the JITSIC toolkit can be done now. There is no reason to wait for the final text.
3. Rebuilding the paper trail on commercial rationale. For each restructuring: board minutes, memoranda, correspondence, financing from either side of the deal, and confirmation that the tax basis was carried into the receiving entity. Where something does not exist, a note explaining why beats manufacturing it after the fact.
4. A decision on the eighth-paragraph window. If the inventory turns up a gap that increases the tax base, an amended return filed before the SII opens an enquiry under Article 59 takes the 40% charge off the table. It is the only item on this list with a deadline the company does not control.
5. An internal valuation policy. Who signs off, on what method, with whose signature and into what file. It turns an ad hoc call into a procedure an auditor can follow.
6. A review of the related-party map and the group representative. Article 8 No. 17 reaches well past share ownership, and plenty of family structures are related without anyone having noticed. Check the Article 8 No. 14 appointment at the same time: without it, the collaborative route is closed and the audit route is what remains.
7. A protocol for answering the citación. The reply sets the factual ground on which the case will later be argued before the Tax and Customs Court. The notice itself has already added three months to the limitation periods and an extension adds more, so asking for one is a decision to take with that consequence in view.
8. Reading risk at group level rather than company level. With Article 59 ter in operation, the review has to take in every company that touched each transaction, not each set of accounts in isolation.

There is a ninth item, and it is an opportunity rather than an obligation. The consultation stays open until October, and putting technical comments in through a professional body is a legitimate and underused way of shaping the final text.

A published method binds the author too

A tax administration opening its criteria to academics, professional bodies and advisory firms is genuinely good news, and there is no need for cynicism about it. Predictability is scarce, and this process generates some. Transparency also runs in both directions. A published method binds the authority that published it.

Article 64 already requires an assessment or valuation order to set out enough for the taxpayer to follow the technical reasoning and see what evidence supported the market value the SII arrived at. It must also state why the taxpayer’s reply to the citación was rejected. From October that requirement acquires a benchmark. An adjustment that departs from the SII’s own framework will have to say why it departed, and that is a line of defence not currently available.

Tax certainty is not about knowing the size of the bill. It is about being able to work out in advance how the decision will be reached. That will be written down in October. The transactions it will have to judge have already happened. When the final text appears we will come back to it: what made the cut, what did not, and how to argue against an adjustment that steps outside the published framework.

This article is general in nature and does not constitute legal advice on any particular matter. The provisions cited should be checked in their current form before any decision is taken. If your company or group has carried out reorganizations, capital contributions or related-party transactions in recent years, get in touch and we will look at whether those valuations would survive the framework due in October.